Seized crypto has become China’s latest controversy—and what they’re doing with it will genuinely surprise you.
Even though China banned crypto trading years ago, a massive pile of digital currencies has found its way into government hands through crackdowns on crime. In 2023 alone, the country uncovered crypto-related crimes worth over 430.7 billion yuan (~$59 billion). That’s not pocket change—it’s enough to shake global markets.
So, what happens to this seized crypto? You’d think it disappears into a black hole of government control—but the reality is way stranger.
Let’s break down the shocking facts.
1. China’s Selling Seized Crypto Despite Banning It
Yep, you read that right.
China may have banned crypto trading and doesn’t even recognize digital tokens as legal property—but it’s still cashing in on seized crypto. Local governments quietly convert these digital assets into yuan via private firms, often selling them overseas to avoid domestic legal scrutiny.
That means the same crypto that’s “illegal” is generating revenue for local authorities. Talk about mixed signals.
2. Over 3,000 People Were Prosecuted for Crypto Crimes Last Year
In just one year, over 3,000 individuals were prosecuted for money laundering and fraud involving cryptocurrencies. That’s a tenfold increase from the year before.
While authorities are cracking down hard, the sheer scale of these numbers shows that crypto continues to thrive underground in China—and the government is struggling to keep up.
3. Local Governments Are Making Billions
The crypto that’s been seized isn’t just locked away in a vault. It’s liquid gold.
Some provinces have reportedly made millions, even billions, by offloading seized tokens. The cash brought in this way has become a lifeline for local governments facing economic pressure.
This raises a big ethical question: Should illegal assets be used to fund public budgets?
4. Legal Experts Are Calling for a Total Overhaul
The inconsistency is getting too big to ignore.
Legal experts, police officials, and judges are calling for reforms to standardize how seized crypto should be handled. Some want the People’s Bank of China to take over control entirely, while others suggest creating a state crypto reserve—an idea even floated in the U.S. under Donald Trump’s administration.
Right now, there are no clear national guidelines. Every local government handles it differently, and that chaos could spell trouble.
5. Third-Party Liquidators Operate in a Legal Grey Zone
The middlemen converting seized crypto to yuan operate in a space with almost zero regulation.
These private firms are often overseas and are trusted to handle billions in digital currency with little oversight. If one of them disappears or mishandles the funds, there’s no solid legal framework to recover it.
This loophole is one of the biggest risks China faces today when dealing with seized crypto.
Final Thoughts: A Crypto Contradiction
China’s war on crypto is full of contradictions. On one hand, the government is punishing people for using it. On the other, it’s profiting from the very same technology.
As digital assets become harder to ignore, China’s approach to seized crypto could shape how other nations deal with similar situations. For now, though, it’s a wild, unpredictable space—and one that’s definitely worth watching.
